<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended June 30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------- --------------
Commission file number
------------------------------------
BLUE JAY ENTERPRISES, INC.
(Exact name of small business issuer
as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 23-2154902
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
11835 WEST OLYMPIC BOULEVARD, EAST TOWER, LOS ANGELES, CA 90064
(Address of principal executive offices)
(310) 208-5589
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court. Yes ____ No ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
724,059 AS OF JUNE 30, 1996
Transitional Small Business Disclosure Format (check one); Yes No X
----- -----
<PAGE> 2
BLUE JAY ENTERPRISES, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- -----------
CURRENT ASSETS (Unaudited)
<S> <C> <C>
Cash $ 50 $ -
---------- -----------
Total Current Assets 50 -
---------- -----------
TOTAL ASSETS $ 50 $ -
========== ===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 22,982 $ 26,733
Note payable - related party (Note 3) 9,950 10,000
---------- -----------
Total Current Liabilities 32,932 36,733
---------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock: 50,000,000 shares
authorized of $0.001 par value, 724,059 and
663,559 shares issued and outstanding 724 664
Additional paid-in capital 4,814,162 4,798,422
Deficit accumulated during the
development stage (4,88) (4,835,819)
---------- -----------
Total Stockholders' Equity (Deficit) (32,882) (36,733)
---------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 50 $ -
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
BLUE JAY ENTERPRISES, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Three Months For the Six Months December 1,
Ended June 30, Ended June 30, 1980 Through
------------------------------- ------------------------------ June 30,
1996 1995 1996 1995 1996
-------------- -------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
EXPENSES 9,608 785 11,949 7,706 42,426
LOSS FROM
DISCONTINUED
OPERATIONS (NOTE 4) - - - - 4,805,342
-------------- -------------- -------------- ------------- ---------------
NET (LOSS) INCOME $ (9,608) $ (785) $ (11,949) $ (7,706) $ (4,847,768)
============== ============== ============== ============= ==============
NET INCOME (LOSS)
PER SHARE $ (0.01) $ (0.00) $ (0.02) $ (0.01)
============== ============== ============== =============
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 708,934 663,508 708,934 663,508
============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
BLUE JAY ENTERPRISES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the Stock
---------------------------------- Paid-in Development Subscriptions
Shares Amount Capital Stage Receivable
------------- ------------ --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 1, 1980 - $ - $ - $ - $-
Common stock issued at
inception for $0.20 per share 32,250 32 6,418 - -
Net loss from inception on
December 1, 1980 through
December 31, 1980 - - - (300) -
--------------- --------------- --------------- --------------- ------
Balance, December 31, 1980 32,250 32 6,418 (300) -
Common stock issued for
services rendered at $35.00
per share 2,000 2 69,898 - -
Common stock issued for
cash at $16.60 per share 21,250 21 351,229 - -
Common stock issued for
oil and gas properties at
$3.40 per share 140,000 140 472,022 - -
Common stock issued
for cash from stock
offering at $20.00 per share 175,000 175 3,499,825 - -
Stock offering costs - - (350,000) - -
Net loss for the year ended
December 31, 1981 - - - (628,545) -
--------------- --------------- --------------- --------------- ------
Balance, December 31, 1981 370,500 370 4,049,392 (628,845) -
Issuance of common stock
subscriptions 14,000 14 176,236 - (245,000)
Net loss for the year ended
December 31, 1982 - - - (1,075,657) -
--------------- --------------- --------------- --------------- -----
Balance, December 31, 1982 384,500 $ 384 $ 4,225,628 $ (1,704,502) $(245,000)
--------------- --------------- --------------- --------------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
BLUE JAY ENTERPRISES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the Stock
--------------------------- Paid-in Development Subscriptions
Shares Amount Capital Stage Receivable
--------- ------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1982 384,500 $ 384 $ 4,225,628 $(1,704,502) $(245,000)
Cancellation of common stock (22,500) (22) 22 - -
Issuance of common stock at
$5.00 per share 875 1 5,624 - -
Issuance of common stock
subscriptions 1,250 1 4,999 - (6,250)
Net loss for the year ended
December 31, 1983 - - - (289,161) -
---------- -------- ----------- ------------ -----------
Balance, December 31, 1983 364,125 364 4,236,273 (1,993,663) (251,250)
Net loss for the year ended
December 31, 1984 - - - (307,183) -
---------- -------- ----------- ------------ -----------
Balance, December 31, 1984 364,125 364 4,236,273 (2,300,846) (251,250)
Cancellation of subscriptions
receivable (15,250) (15) (181,235) - 251,250
Net loss for the year ended
December 31, 1985 - - - (707,785) -
---------- -------- ----------- ------------ -----------
Balance, December 31, 1985 348,875 349 4,055,038 (3,008,631) -
Common stock issued for
services rendered at $0.20
per share 14,684 15 2,912 - -
Net loss for the year ended
December 31, 1986 - - - (1,656,973) -
---------- -------- ----------- ------------ -----------
Balance, December 31, 1986 363,559 $ 364 $ 4,057,950 $(4,665,604) $ -
---------- -------- ----------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
BLUE JAY ENTERPRISES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the Stock
--------------------------------- Paid-in Development Subscriptions
Shares Amount Capital Stage Receivable
--------------- --------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1986 363,559 $ 364 $ 4,057,950 $ (4,665,604) $-
Net loss for the year ended
December 31, 1987 - - - (16,527) -
--------------- --------------- --------------- --------------- --------
Balance, December 31, 1987 363,559 364 4,057,950 (4,682,131) -
Notes payable paid off by
related party, treated as
additional paid-in capital
(Note 3) - - 641,028 - -
Net loss for the year ended
December 31, 1988 - - - (39,795) -
--------------- --------------- --------------- --------------- --------
Balance, December 31, 1988 363,559 364 4,698,978 (4,721,926) -
Common stock issued in lieu
of wages at $0.35 per share
(Note 3) 150,000 150 52,850 - -
Net loss for the year ended
December 31, 1989 - - - (68,421) -
--------------- --------------- --------------- --------------- --------
Balance, December 31, 1989 513,559 514 4,751,828 (4,790,347) -
Net loss for the year ended
December 31, 1990 - - - (14,995) -
--------------- --------------- --------------- --------------- --------
Balance, December 31, 1990 513,559 514 4,751,828 (4,805,342) -
Common stock issued in lieu
of wages at $0.29 per share
(Note 3) 150,000 150 42,850 - -
Net loss for the year ended
December 31, 1991 - - - - -
--------------- --------------- --------------- --------------- --------
Balance, December 31, 1991 663,559 $ 664 $ 4,794,678 $ (4,805,342) $-
--------------- --------------- --------------- --------------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
BLUE JAY ENTERPRISES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the Stock
------------------------------- Paid-in Development Subscriptions
Shares Amount Capital Stage Receivable
------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1991 663,559 $ 664 $ 4,794,678 $ (4,805,342) $-
Net loss for the year ended
December 31, 1992 - - - (2,782) -
------------- --------------- --------------- -------------- ------
Balance, December 31, 1992 663,559 664 4,794,678 (4,808,124) -
Net loss for the year ended
December 31, 1993 - - - (1,010) -
------------- --------------- --------------- -------------- ------
Balance, December 31, 1993 663,559 664 4,794,678 (4,809,134) -
Payment of accounts payable
treated as additional paid-in
capital (Note 3) - - 3,744 - -
Net loss for the year ended
December 31, 1994 - - - (19,035) -
------------- --------------- --------------- -------------- ------
Balance, December 31, 1994 663,559 664 4,798,422 (4,828,169) -
Net loss for the year ended
December 31, 1995 - - - (7,650) -
------------- --------------- --------------- -------------- ------
Balance, December 31, 1995 663,559 664 4,798,422 (4,835,819) -
Common stock issued for
cash at $1.50 per share
(Unaudited) 10,500 10 15,740 - -
Payment on note payable
through the issuance of
common stock (Unaudited) 50,000 50 - - -
Net loss for the six
months ended
June 30, 1996 (Unaudited) - - - (11,949) -
------------- --------------- --------------- -------------- ------
Balance, June 30, 1996 (Unaudited) 724,059 $ 724 $ 4,814,162 $ (4,847,768) $-
============= =============== =============== ============== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
BLUE JAY ENTERPRISES, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
December 1,
For the Three Months For the Six Months 1980 Through
Ended June 30, Ended June 30, June 30,
------------------------------- ------------------------------ --------------
1996 1995 1996 1995 1996
-------------- -------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Loss from operations $ (9,608) $ (785) $ (11,949) $ (7,706) $(4,847,768)
Loss from disposal of
oil and gas properties - - - - 472,162
Payment of liabilities by
shareholder - - - - 644,772
Common stock issued for
services and wages - - - - 168,827
Increase (decrease) in
accounts payable 9,608 785 (3,751) 7,706 22,982
-------------- -------------- -------------- ------------- ------------
Net Cash (Used) by
Operating Activities - - (15,700) - (3,539,025)
-------------- -------------- -------------- ------------- ------------
CASH FLOWS FROM
INVESTING ACTIVITIES - - - - -
-------------- -------------- -------------- ------------- ------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from note
payable - - - - 10,000
Common stock issued for
cash - - 15,750 - 3,529,075
-------------- -------------- -------------- ------------- ------------
Net Cash Provided by
Financing Activities - - 15,750 - 3,539,075
-------------- -------------- -------------- ------------- ------------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS - - 50 - 50
CASH AND CASH
EQUIVALENTS AT
BEGINNING OF PERIOD - - - - -
-------------- -------------- -------------- ------------- -----------
CASH AND CASH
EQUIVALENTS AT
END OF PERIOD $ - $ - $ 50 $ - $ 50
============== ============== ============== ============= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
BLUE JAY ENTERPRISES, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months December 1,
Ended June 30, Ended June 30, 1980 Through
-------------------------- -------------------------- June 30,
1996 1995 1996 1995 1996
-------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
CASH PAID FOR
Interest $ - $ - $ - $ - $ 233,153
Taxes $ - $ - $ - $ - $ -
NON CASH FINANCING
ACTIVITIES
Common stock issued for
oil and gas properties $ - $ - $ - $ - $ 472,162
Common stock issued for
service rendered and
wages $ - $ - $ - $ - $ 168,827
Liabilities paid by
shareholders added to
additional paid-in capital $ - $ - $ - $ - $ 644,772
Common stock issued for
a reduction in note
payable $ - $ - $ 50 $ - $ 50
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
BLUE JAY ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1996 and December 31, 1995
NOTE 1 - ORGANIZATION AND HISTORY
The financial statements presented are those of Blue Jay Enterprises,
Inc. (the "Company"). The Company was incorporated under the laws of the State
of Delaware on December 1, 1980, under the name of Blue Jay Energy Corporation.
The name was changed to Blue Jay Enterprises, Inc. on July 1, 1986. The
Company was organized to engage in oil and gas exploration and development.
The Company discontinued operations in 1990, and has been reclassified as a
development stage company. Since the discontinuation of operations, the
Company has sought new business opportunities believed to hold a potential for
profit. See Item 2, Plan of Operations.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a calendar year end.
b. Loss Per Share
The computations of loss per share of common stock are based on the
weighted average number of shares outstanding at the date of the
financial statements.
c. Provision for Taxes
At June 30, 1996, the Company had net operating loss carry forwards
totaling approximately $4,850,000 that may be offset against future
taxable income through 2011. No tax benefit has been reported in the
financial statement. Accordingly, the potential tax benefits of the
loss carry forwards are offset by a valuation of the same amount.
Note 3 - RELATED PARTY TRANSACTIONS
For the periods ended June 30, 1996 and December 31, 1995, a certain
shareholder of the Company paid $5,206 and $7,650 in expenses on the
Company's behalf, respectively. These expenses are to be repaid and
are carried in accounts payable at June 30, 1996 and December 31,
1995, respectively.
For the year ended December 31, 1994, shareholders of the Company
contributed $3,744 to meet minimal Company expenses. This amount was
treated as additional paid-in capital. Shareholders of the Company
also paid $8,000 in expenses on the Company's behalf. These expenses
are to be repaid and are carried in accounts payable at December 31,
1995.
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
For the year ended December 31, 1989 and 1991, the Company owed the
President of the Company $53,000 and $43,000, respectively, for back
salaries. The Company was not in a position to pay amounts due and
therefore, the Board of Directors approved the issuance of 3,000,000
and 3,000,000 shares of common stock for 1989 and 1991, respectively.
The Company also transferred all fixed assets to the President of the
Company for salaries owed.
On January 16, 1988, the Company issued a $10,000, non-interest
bearing note payable for back salaries owed to the President of the
Company. On March 28, 1996, $50.00 of the principal amount was paid
through the issuance of 50,000 shares of the Company's common stock to
its President. The remaining balance of the note was payable January
16, 1994, and is in default making it due immediately without demand
or notice. The note is convertible at any time, at the option of the
payee, into the Company's common shares at the par value at time of
conversion.
A related party paid off a loan from a financial institution which
totaled $501,207 during 1988. The total amount due to the related
party was $641,028 which was converted into additional paid-in
capital.
Note 4 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash or other material assets, nor does it have
established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. The Company has
entered into agreements pursuant to which it will acquire operating
businesses. See Item 2, Plan of Operations. Until the transactions
contemplated by those agreements are consummated, the President of the
Company has agreed to advance personal funds to meet certain of the
Company's obligations.
Note 5 - DISCONTINUED OPERATIONS
In or about 1986, the Company ceased operations in the oil and gas
field and until 1990 confined its activities to the winding up of
matters arising out of prior years' operations. The Company
discontinued all business operations in or about 1990. All revenues
generated by the Company have been netted against the expenses and are
grouped into the discontinued operations line on the statement of
operations.
Note 6 - LITIGATION SETTLEMENT
On July 29, 1994, the Company entered into a Mutual Release of All
Claims with Dime Box Petroleum Corporation (DBPC) and certain of its
related limited partnerships. DBPC and the Company released each
other from any claims against each other and covenanted not to sue
each other forever.
Note 7 - COMMON STOCK
On March 9, 1995, the shareholders of the Company approved a one for
twenty (1 for 20) reverse split of the Company's common stock. The
financial statements reflect the reverse split on a retroactive bases.
The par value of the Company's common stock was reduced from $0.01 to
$0.001 and the shares authorized were increased to 50,000,000.
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 12
Item 2. PLAN OF OPERATIONS
In the current fiscal year and for a number of prior years, including
the two most recent fiscal years, the Company's sole activity has been to seek
new business, which activity has been financed by advances from management.
During that period, the Company has had no operations and no revenues from
operations.
The Company has entered into agreements (the "Agreements") which, as
modified on July 31, 1996, provide for the Company to acquire all of the issued
and outstanding common stock of United Dynamatics, Inc., a Delaware corporation
("UDI"), and 81% of the issued and outstanding common stock of Maxwell
Dynamometer Systems, Inc., a Delaware corporation ("Maxwell").
UDI, though its wholly owned subsidiary Dynamatic Corporation
("Dynamatic"), manufactures specialized electric motors and variable speed
drives and controls utilizing the Eddy Current Drive ("ECD") operating
principal to control motor speed. The variable speed drives are used in a
variety of products including stamping presses, pumps and special process
equipment. Dynamatic also manufactures engine dynamometers and transmission
dynamometers for a variety of large industrial customers, primarily in the
automotive and heavy equipment industries. UDI employs approximately 125
persons at facilities in Kenosha, Wisconsin and Exton, Pennsylvania.
Maxwell manufactures and installs customized dynamometer systems. Its
current focus is on large diameter dynamometers primarily used to perform
various tests on trucks and buses. Maxwell employs approximately 16 persons at
facilities in Exton, Pennsylvania.
The UDI and Maxwell transactions are contingent on the satisfaction of
certain conditions and the closing is expected to occur by September 30, 1996.
PART II - OTHER INFORMATION
Item 6 -
<TABLE>
<CAPTION>
(a) Exhibit No. Description
---------- -----------
<S> <C>
10.1 First Amended Purchase and Sale Agreement, dated July 31, 1996 (UDI).
10.2 First Amended Purchase and Sale Agreement, dated July 31, 1996 (Maxwell).
27.1 Financial Data Schedule.
</TABLE>
(b) The Company filed a Report on Form 8-K on June 7, 1996. Item
5 of such Form 8-K reported on the Company's execution of
agreements to purchase all of the issued and outstanding
common stock of UDI and certain other assets.
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BLUE JAY ENTERPRISES, INC.
Date: August 12, 1996 /s/ ROBERT M. BERNSTEIN
Robert M. Bernstein, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: August 12, 1996 /s/ ROBERT M. BERNSTEIN
Robert M. Bernstein, President
Date: August 12, 1996 /s/ HARVEY KRAVETZ
Harvey Kravetz, Secretary
13
<PAGE> 1
EXHIBIT 10.1
FIRST AMENDED
PURCHASE AND SALE AGREEMENT
This First Amended Purchase and Sale Agreement (the "Agreement") is
entered into this 31st day of July, 1996 by and between Blue Jay, Enterprises,
Inc., a Delaware corporation ("Blue Jay"), Robert M. Bernstein ("Bernstein"),
and the following shareholders of United Dynamatics Inc., a Delaware
corporation ("UDI"); Darnley Holdings, Ltd., a Bahamian corporation
("Darnley"); Capital Idea, Inc., a Colorado corporation; and EETC Inc., a
Delaware corporation, Frank B. Holze and David M. Barrett (hereinafter the
foregoing shareholders collectively are referred to as "Shareholders" and
individually referred to as a "Shareholder").
RECITALS
WHEREAS, the parties hereto, except Darnley, entered into a Purchase
and Sale Agreement as of May 17, 1996 (the "May 17 Agreement").
WHEREAS, the parties desires to amend the May 17 Agreement to read in
its entirety as hereinafter set forth.
WHEREAS, Vintage Enterprises, Inc., a Delaware corporation, was a
party to the May 17 Agreement and will no longer be a party to the transactions
contemplated hereby and by the May 17 Agreement.
NOW, THEREFORE, the parties hereby amend the May 17 Agreement to read
in its entirety as follows:
WHEREAS, Shareholders own 1,068 shares (the "UDI Shares") of common
stock, no par value per share, of UDI (the "UDI Common Stock"), which
constitute all of the outstanding UDI Common Stock.
WHEREAS, UDI owns all of the issued and outstanding stock of Dynamatic
Corporation ("Dynamatic") and Kenosha Corporation ("Kenosha"), each a Delaware
corporation.
WHEREAS, Shareholders and Blue Jay desire that Blue Jay acquire the
UDI Shares in exchange for shares of common stock, $.001 par value per share,
of Blue Jay ("Blue Jay Common Stock") that, together with the transfer of
certain assets of Capital Idea, Inc. ("Capital Idea") to Blue Jay pursuant to a
Purchase and Sale Agreement of even date herewith between Blue Jay and Capital
Idea (the "Capital Idea Agreement"), is intended to qualify as a tax-free
transfer under Section 351(a) of the Internal Revenue Code of 1986, as amended,
and upon completion of which UDI will be a wholly-owned subsidiary of Blue
Jay; and
<PAGE> 2
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
AGREEMENT:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and
conditions set forth herein, on the Final Closing Date (as hereinafter
defined), the Shareholders, severally and individually, shall sell and deliver
to Blue Jay, and Blue Jay shall purchase and accept from each Shareholder, the
UDI Shares.
ARTICLE II
CONSIDERATION; CLOSING
2.1 Consideration. The consideration to be paid by Blue
Jay for the UDI Shares shall be in the form of shares of Blue Jay Common Stock
in the ratio of 3779.77 shares of newly issued Blue Jay Common Stock for each
outstanding share of UDI Common Stock, or an aggregate 4,036,794 shares of Blue
Jay Common Stock (the "Blue Jay Shares").
2.2 Escrow Arrangement. The Shareholders, Blue Jay and
Firstar Trust Company, as escrow agent (the "Escrow Agent"), have entered into
an escrow agreement, as amended, in the form attached hereto as Exhibit A ("the
Escrow Agreement") pursuant to which (a) the Shareholders have delivered to the
Escrow Agent the UDI Shares and (b) Blue Jay has delivered to the Escrow Agent
the Blue Jay Shares, all of which shares shall be held by the Escrow Agent in
accordance with the Escrow Agreement.
2.3 Closing. The closing in escrow of the transactions
contemplated hereby ("Escrow Closing") was held at Trafalgar Financial
Services, Inc., 126 State Street, Boston, Massachusetts at 1:00 P.M. May 17,
1996. The "Final Closing Date" shall mean the date on which the Escrow Agent
releases the documents pursuant to Section 3.1(a) of the Escrow Agreement which
shall be the first business day following satisfaction of all closing
conditions set forth in Article VIII and IX hereof.
2.4 Deliveries on the Final Closing Date. On the Final
Closing Date:
(a) UDI, as representative of the Shareholders (in such capacity,
the "Representative"), and Blue Jay shall deliver to the Escrow Agent the
Notice of Release referred to in the Escrow Agreement;
(b) The Escrow Agent shall deliver to Blue Jay certificates
representing the UDI Shares, duly endorsed for transfer or in blank; and
-2-
<PAGE> 3
(c) The Escrow Agent shall deliver to the Representative
certificates representing the Blue Jay Shares in the amounts set forth on
Schedule 2.4 hereto or such other allocations as may be mutually agreed to by
the Shareholders.
ARTICLE III
INDIVIDUAL AND SEVERAL REPRESENTATIONS OF THE SHAREHOLDERS
In order to induce Blue Jay to enter into this Agreement, each of the
Shareholders, severally and individually, makes the following representations
and warranties to Blue Jay.
3.1 Ownership of Shares. Such Shareholder is the record
and beneficial owner of the kind and number of UDI Shares as are set forth
opposite such Shareholder's name on Schedule 3.1 hereto. Such Shareholder owns
such shares free and clear of all liens, encumbrances, pledges, claims and
other security interests and all such shares are validly issued, fully paid and
nonassessable (except to the extent otherwise provided by Section
180.0622(2)(b) of the Wisconsin Statutes). None of the UDI Shares owned by
such Shareholder is subject to any marital property or other agreement,
judgment, order, voting trust or proxy or other agreement which either limits
or restricts such Shareholder's absolute authority to transfer its UDI Shares
as herein provided or requires the holder thereof to vote such shares in any
particular manner.
3.2 Enforceability; Conflicting Obligations. Such
Shareholder has all necessary power and authority to enter into and consummate
the transactions contemplated by this Agreement in accordance with its terms
and to sell to Blue Jay the number of UDI Shares set forth opposite such
Shareholder's name on Schedule 3.1 hereto. This Agreement has been duly
authorized by such Shareholder and is such Shareholder's valid and binding
obligation, enforceable against such Shareholder in accordance with its terms.
The execution and delivery by such Shareholder of this Agreement do not, and
the consummation of the sale of the UDI Shares by such Shareholder contemplated
hereby will not, conflict with or violate the provisions of any order, writ,
decree, agreement, contract, restriction or organizational documents to which
such Shareholder is a party or to which such Shareholder is bound.
ARTICLE IV
JOINT AND SEVERAL REPRESENTATIONS OF THE SHAREHOLDERS
In order to induce Blue Jay to enter into this Agreement, the
Shareholders, jointly and severally, make the following representations and
warranties to Blue Jay.
4.1 Organization and Qualification. Each of UDI,
Dynamatic and Kenosha is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Delaware.
4.2 Capitalization.
(a) Company. The entire authorized capital stock of UDI
consists of 1,500 shares of UDI Common Stock, of which 1,068 shares are
outstanding and owned by the Shareholders. Except as set forth on Schedule 4.2
hereof, there are no outstanding options, warrants, convertible securities or
other rights to subscribe for or acquire any capital stock or securities
convertible into capital stock of UDI.
(b) Subsidiaries. Dynamatic and Kenosha (the
"Subsidiaries") constitute the only wholly-owned subsidiaries of UDI. The
authorized capital stock of Dynamatic consists of 1,500 shares of common stock,
no par value per share, of which 1,068 shares are outstanding, and the
authorized capital stock of Kenosha consists of 1,500 shares of common stock,
no par value, of which 1,068 shares are outstanding. All such issued and
outstanding shares of Dynamatic and Kenosha are owned by UDI free and clear of
all liens, encumbrances, pledges, claims and other security interests.
4.3 Litigation. Except as set forth on Schedule 4.3,
there are no claims, suits, actions, arbitrations, administrative proceedings
or investigations, pending or, to UDI's knowledge, threatened against UDI or
either Subsidiary that could have a material adverse effect on the financial
condition of UDI and the Subsidiaries, taken as a whole, or restrict the
ability of the Shareholders to consummate the transactions contemplated by this
Agreement.
4.4 Financial Information. The financial information of
UDI that has been previously provided to Bernstein fairly presents in all
material respects the financial position of UDI as of the dates indicated, all
in conformity with generally accepted accounting principles consistently
applied during the periods involved, except as otherwise noted therein.
4.5 Investment Intent. The Blue Jay Shares being
acquired by the Shareholders hereunder are being acquired for investment and
not with a view toward distribution thereof. The Shareholders acknowledge that
such shares have not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or any state securities laws and may be resold only
pursuant to an effective registration covering such shares or pursuant to an
available exemption from registration. The Shareholders further acknowledge
that the certificates representing the Blue Jay Shares shall bear the following
legend:
The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or the
securities laws of any state, but have been issued in reliance upon
exemptions therefrom. The securities may not be offered, sold,
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<PAGE> 5
pledged or otherwise transferred without registration under the Act or
the opinion of counsel satisfactory to the Corporation that an
exemption from registration is available or that such transfer may
otherwise lawfully be made.
4.6 Brokers. Neither the Shareholders, UDI, nor either of
the Subsidiaries has incurred or made commitments for any brokerage, finders'
or similar fees in connection with the transactions contemplated by this
Agreement, except the engagement letter, dated April 15, 1996, among Trafalgar
Financial Services, Inc., UDI and Capital Idea, Inc.
4.7 Representations and Warranties True and Correct. The
representations and warranties contained herein, and all other documents,
certifications, materials and written statements or written information
concerning UDI or the Subsidiaries given to Blue Jay by or on behalf of the
Shareholders do not include any untrue statement of a material fact or omit to
state a material fact required to be stated herein or therein in order to make
the statements herein or therein, in light of the circumstances under which
they are made, not misleading.
ARTICLE V
REPRESENTATIONS OF BLUE JAY
In order to induce the Shareholders to enter into this Agreement, Blue
Jay and Robert M. Bernstein, jointly and severally, make the following
representations and warranties to the Shareholders.
5.1 Organization. Blue Jay is duly organized, validly
existing and in good standing under the laws of the State of Delaware with all
requisite power and authority to own, lease and operate its properties and to
conduct its business as currently operated and conducted.
5.2 Capitalization of Blue Jay. The authorized
capital stock of Blue Jay consists of 50,000,000 shares of Common Stock, $.001
par value per share, of which 724,059 shares are issued and outstanding. All
of such outstanding shares have been issued pursuant to and in accordance with
effective registration statements under the 1933 Act and in compliance with
applicable state securities laws or pursuant to valid exemptions from
registration under the 1933 Act and any applicable state securities laws and
rules and regulations under such laws. All of the outstanding shares of Blue
Jay Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and are free of preemptive rights. There are no other shares of
capital stock or other equity securities (or debt securities with any voting
rights or convertible into securities with any voting rights) of Blue Jay
outstanding and no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of
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capital stock of Blue Jay, except for an option ("Option") granted to Bernstein
pursuant to an Option Agreement (the "Option Agreement") of even date herewith
in the form of Exhibit C hereto.
5.3 Authorization. Blue Jay has full power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by Blue Jay's
Board of Directors and no other corporate proceedings on the part of Blue Jay
are necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Blue Jay and is
the legal, valid and binding obligation of Blue Jay, enforceable against Blue
Jay in accordance with its terms. The Blue Jay Common Stock to be issued
hereunder and under the Capital Idea Agreement, when issued in accordance with
the terms of this Agreement and the Capital Idea Agreement, respectively, will
be validly issued, fully paid and nonassessable.
5.4 Reports and Financial Statements. Blue Jay
has filed all reports on Form 10-Q, Form 10-QSB and Form 10-K required to be
filed with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act") since 1986
(collectively, the "SEC Reports"). Each of the balance sheets (including the
related notes) included in the SEC Reports fairly presents in all material
respects the financial position of Blue Jay as of the date thereof, and each of
the income statements and statements of cash flow (including the related notes)
included therein fairly present in all material respects the results of
operations and cash flows of Blue Jay for the period or as of the date set
forth therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of unaudited interim financial statements, to
normal year-end adjustments and any other adjustments described therein.
5.5 Litigation. There are no claims, suits, actions,
arbitrations, administrative proceedings or investigations, pending or, to Blue
Jay's or Bernstein's knowledge, threatened against Blue Jay or Bernstein that
could have a material adverse effect on Blue Jay or restrict the ability of
Blue Jay to consummate the transactions contemplated by this Agreement or the
other agreements referred to herein.
5.6 Investment Intent. The UDI Shares are being
acquired for investment and not with a view toward distribution thereof. Blue
Jay acknowledges that such shares have not been registered under the 1933 Act
or any state securities laws and may be resold only pursuant to an effective
registration covering such shares or pursuant to an available exemption from
registration. Blue Jay further acknowledges that the certificates representing
the UDI Shares shall bear the legend set forth in Section 4.5 hereof:
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<PAGE> 7
5.7 Brokers. Neither Blue Jay nor Bernstein has incurred
or made commitments for, any brokerage, finders' or similar fees in connection
with the transactions contemplated by this Agreement.
5.8 Representations and Warranties True and Correct. The
representations and warranties contained herein, and all other documents,
certifications, materials and written statements or written information given
to the Shareholders by or on behalf of Blue Jay, do not include any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or therein in order to make the statements herein or therein, in
light of the circumstances under which they are made, not misleading.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
6.1 Survival of Representations. None of the
representations or warranties made by any party to this Agreement shall survive
the Final Closing Date, unless the party making the representation or warranty
knew such representation or warranty was false at the time it was made or as of
the Final Closing Date.
6.2 Agreement to Indemnify.
(a) Bernstein shall indemnify, defend and hold harmless the
Shareholders, UDI, the Subsidiaries, and each officer, director, employee and
agent thereof (collectively the "Indemnified Parties"), from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including interest, penalties and reasonable
attorneys' fees and expenses (collectively, "Damages"), asserted against,
resulting to, imposed upon or incurred by any Indemnified Party, directly or
indirectly, during the one-year period following the Closing, by reason of or
resulting from any claims by stockholders of Blue Jay challenging the fairness
of the transactions contemplated by this Agreement or any claims by
stockholders of Blue Jay or arising out of any transaction by or activities of
Blue Jay prior to the Closing Date.
(b) The obligations of Bernstein set forth in paragraph (a) above
shall be secured by and limited to a pledge by Bernstein to UDI, as
representative of the Indemnified Parties, of shares of Blue Jay Common Stock
and the Option Agreement pursuant to the Pledge Agreement in substantially the
form of Exhibit D attached hereto (the "Pledge Agreement").
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<PAGE> 8
(c) For purposes of satisfying any claim for Damages under this
Section 6.2, the value of the Blue Jay Common Stock pledged shall be the
average of the daily market prices of the Blue Jay Common Stock for the 10
trading days immediately preceding final agreement between Bernstein and the
Indemnified Parties, or final adjudication by a court of competent
jurisdiction, of such claim. For purposes of this Section 6.2(c), the market
price for each trading day shall be the closing price on such day on the
principal securities exchange or market in which the Blue Jay Common Stock is
then traded or, if no sale takes place on such day, the average of the closing
bid and asked prices on such day.
ARTICLE VII
COVENANTS PENDING THE FINAL CLOSING DATE
7.1 Operation of Business. From the date hereof and
until the Final Closing Date, without the prior written consent of the
Representative, Blue Jay shall not:
(a) Increase Compensation. Grant or promise any increase
in compensation to any shareholder, officer or director or employee, nor, by
means of any bonus, profit-sharing, incentive compensation payment, pension,
retirement, medical hospitalization, life insurance or other insurance plan or
plans, or otherwise, increase in any amount the benefits or compensation of any
such employees, directors or officers;
(b) Employment and Labor Contracts. Enter into, amend or
renew or extend any employment contract or collective bargaining agreement;
(c) Disposition of Assets. Sell or dispose of, or
encumber, mortgage or pledge any asset;
(d) Capital Expenditures. Make any capital expenditures,
or enter into any lease of capital equipment or real estate;
(e) Contracts. Enter into any contract, except as
contemplated by this Agreement.
(f) Create or Incur Indebtedness. Enter into any
transaction, or create, assume, incur or guarantee any indebtedness;
(g) Issue Stock; Distributions on Stock. Except for the
Option Agreement and any Blue Jay Common Stock to be issued thereunder,
authorize or issue any shares of capital stock or other securities convertible
into or exercisable for capital stock, or declare or pay any dividend or make
any sale of, or distribution with respect to, any capital stock or directly or
indirectly redeem, purchase or otherwise acquire any capital stock;
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<PAGE> 9
(h) Accounting Procedures. Change any accounting
procedures or practices or its financial structure;
(i) Charter Amendments. Make any amendments to or
changes in its certificate of incorporation or bylaws;
(j) Breach of Contract. Perform any act, or attempt to
do any act, or permit any act or omission to act, which will cause a breach of
any contract, agreement, instrument, document, lease, license, permit,
indenture or other obligation to which it is a party or to which it is bound.
7.2 Access Prior to Final Closing. Blue Jay shall permit
the Shareholders and their counsel, accountants and other representatives full
access during normal business hours to all of the offices, properties, books
and records and contracts of Blue Jay in order that the Shareholders may have
full opportunity to make such investigations as they shall desire of Blue Jay
in connection with the transactions contemplated by this Agreement, and shall
furnish the Shareholders during such period with all such additional financial
and operating data and other information as the Shareholders or their
representatives may from time to time reasonably request.
7.3 Blue Jay Acquisition Proposals. From and after the
date hereof and until the earlier of the consummation of the transactions
contemplated by this Agreement or the termination of this Agreement, neither
Blue Jay nor Bernstein shall (a) solicit or authorize any person to solicit,
directly or indirectly, any inquiries, proposals or offers from any person
relating to any acquisition or purchase of all or substantially all the assets
of, or any equity interest in, or any merger, consolidation or business
combination with, Blue Jay (a "Blue Jay Acquisition Transaction"), (b) enter
into any agreement with respect to any Blue Jay Acquisition Transaction, or (c)
participate in any negotiations regarding, cooperate with, facilitate or
encourage a Blue Jay Acquisition Transaction or furnish to any other person any
non-public information concerning Blue Jay in connection therewith. Blue Jay
shall immediately notify the Shareholders if any proposal or offer with respect
to a Blue Jay Acquisition Transaction is received by Blue Jay and communicate
to the Representative the terms of any such proposal or offer.
7.4 UDI Acquisition Proposals. From and after the date
hereof and until the earlier of the consummation of the transactions
contemplated by this Agreement or the termination of this Agreement, UDI shall
not (a) solicit or authorize any person to solicit, directly or indirectly, any
inquiries, proposals or offers from any person relating to any acquisition or
purchase of all or substantially all the assets of, or any equity interest in,
or any merger, consolidation or business combination with, UDI (a "UDI
Acquisition Transaction"), (b) enter into any agreement with respect to any UDI
Acquisition Transaction, or (c) participate in any negotiations regarding,
cooperate with, facilitate or encourage a UDI Acquisition Transaction or
furnish to any other person any non-public information concerning UDI in
connection therewith. UDI
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shall immediately notify Blue Jay if any proposal or offer with respect to a
UDI Acquisition Transaction is received by UDI and communicate to Blue Jay the
terms of any such proposal or offer.
ARTICLE VIII
CONDITIONS OF SHAREHOLDERS' OBLIGATION TO CLOSE
The obligation of the Shareholders to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction and
fulfillment, prior to the Final Closing Date of each of the following express
conditions precedent:
8.1 Representation and Warranties. The representations
and warranties in this Agreement made by Blue Jay and Bernstein shall be true
and correct in all respects as of and on the Final Closing Date.
8.2 Performance of Covenants and Obligations. Blue Jay
shall have performed and complied with all of its covenants, agreements and
obligations under this Agreement which are to be performed or complied with by
Blue Jay prior to or on the Final Closing Date.
8.3 Closing of Capital Idea, Inc. Agreement. The
transactions contemplated by the Capital Idea Agreement shall have been
consummated prior to or concurrently with the Final Closing Date.
8.4 Bernstein Agreements. Bernstein shall have
cancelled Blue Jay's Convertible Note dated January 16, 1988 in the principal
amount of $10,000 for Blue Jay's agreement to pay all liabilities of Blue Jay
to Bernstein and others as of the date hereof in an amount not to exceed
$25,000 which will be paid within 60 days of the final Closing Date and (ii)
executed a Consulting Agreement in the form attached hereto as Exhibit E.
8.5 Pledge Agreement. Bernstein shall have executed and
delivered to the Representative the Pledge Agreement.
8.6 Investigation of Blue Jay. The Shareholders shall
have completed their review of such books, records, accounts, contracts and
documents of or relating to the financial condition, liabilities, results of
operations, business and prospects of Blue Jay and such other inquiries or
investigations as they deem necessary or advisable and the results of such
review and investigation shall be satisfactory to the Shareholders in their
sole discretion. Without limiting the generality of the foregoing, the
Shareholders shall be satisfied that (a) Blue Jay has no liabilities or
obligations, whether absolute, accrued, contingent or otherwise and whether due
or to become due, that are not fully reflected on the balance sheet of Blue Jay
as of March 31, 1996, (b) there are no claims, suits, actions, arbitrations,
administrative proceedings or investigations pending or threatened against Blue
Jay that could have a material adverse effect on Blue
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<PAGE> 11
Jay, (c) that the Blue Jay Common Stock to be issued pursuant to this Agreement
and the Capital Idea Agreement when issued will be validly issued, fully paid
and nonassessable and (d) there is no reasonable basis for the assertion
against Blue Jay of any liability or obligation or for the assertion or
commencement of any such claim, suit, action, arbitration, administrative
proceeding or investigation.
ARTICLE IX
CONDITIONS TO BLUE JAY'S OBLIGATION TO CLOSE
The obligation of Blue Jay to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction and fulfillment, prior
to and on the Final Closing Date:
9.1 Representations and Warranties. The representations
and warranties in this Agreement made by the Shareholders shall be true and
correct in all respects as of and on the Final Closing Date.
9.2 Performance of Covenants and Obligations. The
Shareholders shall have performed and complied with all of their material
covenants and obligations under this Agreement.
9.3 Closing of the Capital Idea Agreement.
The transactions contemplated by the Capital Idea Agreement shall have been
consummated prior to or on the Final Closing Date.
9.4 Investigation of UDI. Blue Jay shall have completed
its review of such books, records, accounts, contracts and documents of or
relating to the financial condition, liabilities, results of operations,
business and prospects of UDI and such other inquiries or investigations as it
deems necessary or advisable and the results of such review and investigation
shall be satisfactory to Blue Jay in its sole discretion.
ARTICLE X
OTHER AGREEMENTS
10.1 Cooperation: Public Announcements.
The Shareholders and Blue Jay shall cooperate fully with each other and their
respective counsel and accountants in connection with any actions that may be
required to be taken in order to satisfy their respective obligations under
this Agreement. The Shareholders and Blue Jay shall cooperate with each other
in the preparation of any press releases in connection with the transactions
contemplated by this Agreement and in the preparation and filing of any
documents with the Securities and Exchange Commission or any state securities
agency required as a result of such transactions. Except upon the advice of
counsel or as may be required by law (and in either case upon notice to the
other party), neither the Shareholders nor Blue Jay will, without prior
consultation with the other, make any press
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release or announcement to the public concerning the transactions contemplated
by this Agreement.
10.2 Confidentiality. Each party to this Agreement
understands that certain information which it has been furnished and will be
furnished in connection with this Agreement is confidential and proprietary,
and agrees that it will maintain the confidentiality of such information and
will not disclose it to others or use it, except in connection with the
transaction contemplated hereby, without the consent of the party furnishing
such information. Information which is generally known in the industry
concerning a party or among such party's creditors, generally, or which has
been disclosed to the other party by third parties which have right to do so,
shall not be deemed confidential or proprietary information for these purposes.
In the event that a party is at any time requested or required (by oral
questions, interrogatories, requests for information or documents, subpoena or
similar process) to disclose any information supplied to such party in
connection with such transaction, such party agrees to provide the party
furnishing such information with prompt notice of such request(s) so that the
party furnishing such information may seek an appropriate protective order
and/or waive compliance of the party receiving such information with the terms
of this Section 10.2. Notwithstanding the terms of this Section 10.2, if, in
the absence of a protective order or the receipt of a waiver hereunder, the
party receiving such information is nonetheless, in the opinion of its counsel,
required to disclose information obtained in connection with such transaction
or else stand liable for contempt or suffer other censure or penalty, the party
receiving such information may disclose such information, to the extent and in
the manner so required, without liability hereunder. In the event that such
transaction is not consummated, each party agrees to promptly return all
confidential materials (and all copies thereof) which have been furnished to
him regarding the business and financial condition of the other party,
including all financial statements, reports, contracts, customer lists,
accounts, records, tax returns, data, plans, processes and trade secrets except
to the extent any such documents shall otherwise be publicly available.
10.3 Directors. On or prior to the Closing Date, the
Board of Directors of Blue Jay shall take all action necessary (including
amending the bylaws of Blue Jay) to elect to the Board of Directors four
persons designated by the Shareholders. Immediately upon consummation of the
Closing, all directors of Blue Jay, other than the persons designated by the
Shareholders, shall resign as directors.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated in
the following circumstances:
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(a) By mutual consent of the Shareholders and
Blue Jay;
(b) By the Shareholders in the event the
conditions in Article VIII of this Agreement are not satisfied or waived on or
before September 30, 1996;
(c) By Blue Jay in the event the conditions in
Article IX of this Agreement are not satisfied or waived on or before September
30, 1996.
11.2 Effect of Termination. In the event this Agreement
is terminated pursuant to this Article XI, this Agreement shall be void and
have no further force and effect.
ARTICLE XII
MISCELLANEOUS
12.1 Notices, Etc. All notices, requests, demands, and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered by hand, telegram, telex
or telecopy (receipt confirmed) or seventy-two hours after being mailed, first
call, certified mail, postage prepaid:
(a) To Blue Jay:
Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
Attention: Robert M. Bernstein
With copies to:
Joseph M. Berl
Baker & Hostetler
1050 Connecticut Ave., N.W.
Washington, DC 20036-5304
(202) 861-1500; Fax: _____________
Timothy Smoot, Esq.
7002 Moody Street
Suite 112
LaPalma, CA 90623
(310)402-1801, Fax: (310)402-0643
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(b) To Bernstein:
Robert M. Bernstein
c/o Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
With a copy to:
C. Timothy Smoot, Esq.
Suite 112
7002 Moody Street
LaPalma, CA 90623-1181
(310)402-1801, Fax: (310)402-0643
(c) To Shareholders:
United Dynamatics, Inc.
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
(610)363-8237; Fax: (610)524-8715
Attention C. Eugene Hutcheson
With copies to:
Peggy E. Brever, Esq.
Michael Best & Friedrich
100 East Wisconsin Avenue
Milwaukee, WI 53202
(414)271-6560: Fax: (414)277-0656
Barrett & Schuler
1000 Thomas Jefferson Street
Suite 305
Washington, DC 20007
Attention; David M. Barrett
(202) 728-0888; Fax: (202) 296-7490
12.2 Entire Agreement. This Agreement supersedes
any other discussions and agreement between the parties hereto with respect to
he matters contained herein, and this Agreement and the agreements to be
executed and delivered pursuant hereto and thereto contain the sole and entire
agreement between the parties hereto with respect to the transactions
contemplated herein and therein.
12.3 Amendments and Waivers. This Agreement may be
amended only by an instrument in writing executed by the party against whom
enforcement of the amendment is sought. The president or any vice president of
any corporate party may by a signed writing give any consent, take any action,
waive any inaccuracies in representations or other compliance by any other
party to any of the covenants or conditions herein, modify the terms of this
Agreement to take any other action deemed by him to be necessary or appropriate
to consummate the transactions contemplated by this Agreement.
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12.4 Counterparts; Headings. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. The
headings herein set out are for convenience of reference only and shall not be
deemed a part of this Agreement.
12.5 Binding Effect; Assignment. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, successors and assigns. The Shareholders shall have
the right to assign all or any portion of their rights under this Agreement to
any of their affiliates at any time without the consent of Blue Jay or
Bernstein; provided, however, that notwithstanding such assignment, the
assigning Shareholder(s) shall remain obligated to Blue Jay pursuant to the
terms and conditions of this Agreement.
12.6 Governing Law. The validity and effect of this
Agreement shall be governed by and construed and enforced in accordance with
the laws of the Commonwealth of Pennsylvania.
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IN WITNESS WHEREOF, the parties have executed this First Amended
Agreement as of the date first written above.
BLUE JAY ENTERPRISES, INC.
By: /s/ ROBERT M. BERNSTEIN
---------------------------
Robert M. Bernstein
President
/s/ ROBERT M. BERNSTEIN
------------------------------
Robert M. Bernstein
VINTAGE ENTERPRISES, INC.
By: /s/ LAURENCE W. WILSON
---------------------------
Laurence W. Wilson
President
DARNLEY HOLDINGS, LTD.
By: /s/ FRANK B. HOLZE
---------------------------
E.E.T.C., Ltd.
By: /s/ FRANK B. HOLZE
---------------------------
Frank B. Holze
President
/s/ FRANK B. HOLZE
------------------------------
Frank B. Holze
CAPITAL IDEA, INC.
By: /s/ C. EUGENE HUTCHESON
---------------------------
C. Eugene Hutcheson
President
/s/ CHARLOTTE E. DOREMUS
------------------------------
Charlotte E. Doremus
Secretary
/s/ DAVID M. BARRETT
------------------------------
David M. Barrett
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INDEX OF EXHIBITS AND SCHEDULES
Schedule 2.4 Blue Jay Common Stock to be Received by
each Shareholder
Schedule 3.1 Ownership of Shares
Schedule 4.2 Options for UDI stock
Schedule 4.3 UDI, Dynamatic or Kenosha Litigation
Exhibit A Escrow Agreement
Exhibit B None
Exhibit C Bernstein Option Agreement
Exhibit D Pledge Agreement
Exhibit E Bernstein Consulting Agreement
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EXHIBIT 10.2
FIRST AMENDED
PURCHASE AND SALE AGREEMENT
This FIRST AMENDED PURCHASE AND SALE AGREEMENT (the "Agreement") is
entered into this 31st day of July, 1996 by and between Blue Jay, Enterprises,
Inc., a Delaware corporation ("Blue Jay"), Robert M. Bernstein ("Bernstein")
and Capital Idea, Inc. a Colorado corporation ("Seller").
RECITALS
WHEREAS, the parties hereto entered into a Purchase and Sale Agreement
dated as of May 17, 1996 (the "May 17 Agreement").
WHEREAS, the parties desire to amend the May 17 Agreement to read in
its entirety as hereinafter set forth.
NOW, THEREFORE, the parties hereby amend the May 17 Agreement to read
in its entirety as follows:
WHEREAS, Seller is the owner of that certain 11% Subordinated Note due
2002 of Maxwell Dynamometer Systems, Inc. ("Maxwell") dated May 19, 1994 in
the principal amount of $542,000 and that certain Revenue Note Agreement of
Maxwell dated May 19, 1994 (collectively, the "Notes").
WHEREAS, Seller is the owner of 270,000 shares of the issued and
outstanding capital stock of Maxwell (the "Maxwell Shares").
WHEREAS, Seller desires to sell and Blue Jay desires to purchase
Maxwell Shares and desires Seller to cancel the Notes on the terms and
conditions hereinafter set forth for consideration of shares of common stock,
$.001 par value per share, of Blue Jay ("Blue Jay Common Stock").
WHEREAS, this transaction, together with the transactions contemplated
by that Purchase and Sale Agreement of even date herewith between Blue Jay and
the shareholders of United Dynamatics, Inc. (the "UDI Agreement"), as amended,
is intended to qualify as a tax free exchange under Section 351(a) of the
Internal Revenue Code of 1986, as amended.
<PAGE> 2
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
AGREEMENT:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, on the Final Closing Date (as hereinafter
defined), Seller shall sell and deliver to Blue Jay, and Blue Jay shall
purchase from Seller, the Notes and the Maxwell Shares.
ARTICLE II
CONSIDERATION; CLOSING
2.1 Consideration. The consideration to be paid by Blue
Jay for the cancellation of the Notes and the Maxwell Shares shall be 2,429,737
shares of newly issued Blue Jay Common Stock (the "Blue Jay Shares").
2.2 Escrow Arrangement. The Seller, Blue Jay and Firstar
Trust Company, as escrow agent (the "Escrow Agent"), have entered into an
escrow agreement in the form attached hereto as Exhibit B, as amended, ("the
Escrow Agreement") pursuant to which, (a) Seller is delivering to the Escrow
Agent the Notes as cancelled and the Maxwell Shares and (b) Blue Jay is
delivering to the Escrow Agent the Blue Jay Shares, all of which shares shall
be held by the Escrow Agent in accordance with the Escrow Agreement.
2.3 Closing. The closing in escrow of the transactions
contemplated hereby ("Escrow Closing") was held at Trafalgar Financial
Services, Inc., 126 State Street, Boston, Massachusetts at 1:00 P.M. May 17,
1996. The "Final Closing Date" shall mean the date on which the Escrow Agent
releases the documents pursuant to Section 3.1(a) of the Escrow Agreement which
shall be the first business day following satisfaction of all closing
conditions set forth in Article VII and VIII hereof.
2.4 Deliveries on the Final Closing Date. On the Final
Closing Date:
(a) Seller and Blue Jay shall deliver to the Escrow Agent the
Notice of Release referred to in the Escrow Agreement;
(b) The Escrow Agent shall deliver to Blue Jay the cancelled
Notes and the Maxwell Shares; and
(c) The Escrow Agent shall deliver to Seller certificates
representing the Blue Jay Shares.
<PAGE> 3
ARTICLE III
REPRESENTATIONS OF SELLER
In order to induce Blue Jay to enter into this Agreement, Seller makes
the following representations and warranties to Blue Jay.
3.1 Organization and Qualification. Seller is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Colorado.
3.2 Enforceability; Conflicting Obligations. Seller has
all necessary power and authority to enter into and consummate the transactions
contemplated by this Agreement in accordance with its terms and to sell and
transfer the Note to Blue Jay. This Agreement has been duly authorized by
Seller, constitutes Seller's valid and binding obligation, and is enforceable
against Seller in accordance with its terms. The execution and delivery of
this Agreement do not, and the consummation of the sale of the Notes and the
Option will not, conflict with or violate the provisions of any order, writ,
decree, agreement, contract, restriction or organizational documents to which
Seller is a party, or to which such Seller is bound.
3.3 Investment Intent. The Blue Jay Common Stock
being acquired by Seller hereunder is being acquired for investment and not
with a view toward distribution thereof. Such shares have not been registered
under the Securities Act of 1933 or any state securities laws and may be resold
only pursuant to an effective registration covering such shares or pursuant to
an available exemption from registration. Certificates representing Blue Jay
Common Stock shall bear the following legend:
The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, or the Securities Laws
of any state, but have been issued in reliance upon exemptions
therefrom. The Securities may not be offered, sold, pledged or
otherwise transferred without registration under the Act or the
opinion of counsel satisfactory to the Corporation that an exemption
from registration is available or that such transfer may otherwise
lawfully be made.
3.4 Brokers. Seller has not incurred or made commitments
for, any brokerage, finders' or similar fees in connection with the
transactions contemplated by this Agreement except as set forth in that
engagement letter dated April 15, 1996 between Trafalgar Securities, Inc.,
United Dynamatics, Inc. and Seller.
3
<PAGE> 4
3.5 Representations and Warranties True and Correct. The
representations and warranties contained herein, and all other documents,
certifications, materials and written statements or written information given
to Blue Jay by or on behalf of Seller, do not include any untrue statement of a
material fact or omit to state a material fact required to be stated herein or
therein in order to make the statements herein or therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS OF BLUE JAY
In order to induce Seller to enter into this Agreement, Blue Jay makes
the following representations and warranties to the Shareholders.
4.1 Organization. Blue Jay is duly organized, validly
existing and in good standing under the laws of the State of Delaware with all
requisite power and authority to own, lease and operate its properties and to
conduct its business as currently operated and conducted.
4.2 Capitalization of Blue Jay. The authorized
capital stock of Blue Jay consists of 50,000,000 shares of Common Stock, $.001
par value per share, of which 724,059 shares are issued and outstanding. All
of such outstanding shares have been issued pursuant to and in accordance with
effective registration statements under the 1933 Act and in compliance with
applicable state securities laws or pursuant to valid exemptions from
registration under the 1933 Act and any applicable state securities laws and
rules and regulations under such laws. All of the outstanding shares of Blue
Jay Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and are free of pre-emptive rights. There are no other shares
of capital stock or other equity securities (or debt securities with any voting
rights or convertible into securities with any voting rights) of Blue Jay
outstanding and no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of capital stock of Blue Jay, except for
400,000 shares of Blue Jay Common Stock to be issued to Bernstein upon exercise
of the Option Agreement.
4.3 Authorization. Blue Jay has full power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by Blue Jay's
Board of Directors and no other corporate proceedings on the part of Blue Jay
are necessary to authorize this Agreement or the transactions
4
<PAGE> 5
contemplated hereby. This Agreement has been duly executed and delivered by
Blue Jay and is the legal, valid and binding obligation of Blue Jay,
enforceable against Blue Jay in accordance with its terms.
4.4 Reports and Financial Statements. Blue Jay
has filed all reports on Form 10-Q, Form 10-QSB and Form 10-K required to be
filed with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act") since 1986
(collectively, the "SEC Reports"). Each of the balance sheets (including the
related notes) included in the SEC Reports fairly presents in all material
respects the financial position of Blue Jay as of the date thereof, and each of
the income statements and statements of cash flow (including the related notes)
included therein fairly present in all material respects the results of
operations and cash flows of Blue Jay for the period or as of the date set
forth therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of unaudited interim financial statements, to
normal year-end adjustments and any other adjustments described therein.
4.5 Litigation. There are no claims, suits, actions,
arbitrations, administrative proceedings or investigations, pending or, to Blue
Jay's or Bernstein's knowledge, threatened against Blue Jay or Bernstein that
could have a material adverse effect on Blue Jay or restrict the ability of
Blue Jay to consummate the transactions contemplated by this Agreement or the
other agreements referred to herein.
4.6 Brokers. Neither Blue Jay nor Bernstein has incurred
or made commitments for, any brokerage, finders' or similar fees in connection
with the transactions contemplated by this Agreement.
ARTICLE V
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.1 Survival of Representations. None of the
representations or warranties made by any party to this Agreement shall survive
the Final Closing Date, unless the party making the representation or warranty
knew such representation or warranty was false at the time it was made or as of
the Final Closing Date.
5.2 Agreement to Indemnify.
(a) Bernstein shall indemnify, defend and hold harmless Capital Idea
and each officer, director employee or agent (collectively the "Indemnified
Parties"), from and against all
5
<PAGE> 6
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including interest, penalties and reasonable
attorneys' fees and expenses (collectively, "Damages"), asserted against,
resulting to, imposed upon or incurred by any Indemnified Party, directly or
indirectly, during the one-year period following the Closing, by reason of or
resulting from any claims by stockholders of Blue Jay challenging the fairness
of the transactions contemplated by this Agreement or any claims by
stockholders of Blue Jay arising out of any transaction by or activities of
Blue Jay prior to the Closing Date.
(b) The obligations of Bernstein set forth in paragraph (a) above
shall be secured by and limited to a pledge by Bernstein to Seller, of shares
of Blue Jay Common Stock and an option to purchase shares of Blue Jay Common
Stock pursuant to the Pledge Agreement in substantially the form of Exhibit C
attached hereto (the "Pledge Agreement").
(c) For purposes of satisfying any claim for Damages under this
Section 5.2, the value of the pledged Blue Jay Common Stock shall be the
average of the daily market prices of the Blue Jay Common Stock for the 10
trading days immediately preceding final agreement between Bernstein and the
Indemnified Parties, or final adjudication by a court of competent
jurisdiction, of such claim. For purposes of this Section 5.2(c), the market
price for each trading day shall be the closing price on such day on the
principal securities exchange or market in which the Blue Jay Common Stock is
then traded or, if no sale takes place on such day, the average of the closing
bid and asked prices on such day.
ARTICLE VI
COVENANTS PENDING THE CLOSING DATE
6.1 Operation of Business. From the date hereof and
until the Closing Date, without the prior written consent of the Seller, Blue
Jay shall not:
(a) Increase Compensation. Grant or promise any increase
in compensation to any shareholder, officer, employee or director, nor, by
means of any bonus, profit-sharing, incentive compensation payment, pension,
retirement, medical hospitalization, life insurance or other insurance plan or
plans, or otherwise, increase in any amount the benefits or compensation of any
such employees, directors or officers;
(b) Employment and Labor Contracts. Enter into, amend or
renew or extend any employment contract or collective bargaining agreement;
6
<PAGE> 7
(c) Disposition of Assets. Sell or dispose of, or
encumber, mortgage or pledge any asset;
(d) Capital Expenditures. Make any capital expenditures,
or enter into any lease of capital equipment or real estate;
(e) Contracts. Enter into any contract, except as
contemplated by this Agreement.
(f) Create or Incur Indebtedness. Enter into any
transaction, or create, assume, incur or guarantee any indebtedness;
(g) Issue Stock; Distributions on Stock. Except for the
option referred to in Section 5.2(b) hereof, authorize or issue any shares of
capital stock or other securities convertible into or exercisable for capital
stock, or declare or pay any dividend or make any sale of, or distribution with
respect to, any capital stock or directly or indirectly redeem, purchase or
otherwise acquire any capital stock;
(h) Accounting Procedures. Change any accounting
procedures or practices or its financial structure;
(i) Charter Amendments. Make any amendments to or
changes in its certificate of incorporation or bylaws;
(j) Breach of Contract. Perform any act, or attempt to
do any act, or permit any act or omission to act, which will cause a breach of
any contract, agreement, instrument, document, lease, license, permit,
indenture or other obligation to which it is a party or to which it is bound.
6.2 Access Prior to Closing. Blue Jay shall permit the
Seller and its counsel, accountants and other representatives full access
during normal business hours to all of the offices, properties, books and
records and contracts of Blue Jay in order that the Seller may have full
opportunity to make such investigations as it shall desire of Blue Jay in
connection with the transactions contemplated by this Agreement, and shall
furnish the Seller during such period with all such additional financial and
operating data and other information as the Seller or its representatives may
from time to time reasonably request.
6.3 Acquisition Proposals. From and after the date
hereof and until the earlier of the consummation of the transactions
contemplated by this Agreement or the termination of this Agreement, neither
Blue Jay nor Bernstein shall (a) solicit or authorize any person to solicit,
directly or indirectly, any inquiries, proposals or offers from any person
relating to any acquisition or purchase of all or substantially all the assets
of, or any equity interest in, or any merger, consolidation or
7
<PAGE> 8
business combination with, Blue Jay (an "Acquisition Transaction"), (b) enter
into any agreement with respect to any Acquisition Transaction, or (c)
participate in any negotiations regarding, cooperate with, facilitate or
encourage an Acquisition Transaction or furnish to any other person any
non-public information concerning Blue Jay in connection therewith. Blue Jay
shall immediately notify the Seller if any proposal or offer with respect to an
Acquisition Transaction is received by Blue Jay and communicate to the
Representative the terms of any such proposal or offer.
ARTICLE VII
CONDITIONS OF SELLER'S OBLIGATION TO CLOSE
The obligation of Seller to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction and fulfillment, prior
to or on the Final Closing Date, of each of the following conditions:
7.1 Representation and Warranties. The representations
and warranties in this Agreement made by Blue Jay and Bernstein shall be true
and correct in all respects as of and at the Final Closing Date.
7.2 Performance of Covenants and Obligations. Blue Jay
shall have performed and complied with all of its covenants and obligations
under this Agreement which are to be performed or complied with by Blue Jay
prior to or on the Final Closing Date.
7.3 Closing of UDI, Inc. Agreement. The transactions
contemplated by the UDI Agreement shall have been consummated prior to or on
the Final Closing Date.
7.4 Bernstein Agreements. Bernstein shall have
cancelled Blue Jay's Convertible Note dated January 16, 1988 in the principal
amount of $10,000 for Blue Jay's agreement to pay all liabilities of Blue Jay
to Bernstein as of the date hereof in an amount not to exceed $25,000 and (ii)
executed a Consulting Agreement in the form attached hereto as Exhibit D.
7.5 Pledge Agreement. Bernstein shall have executed and
delivered to Seller the Pledge Agreement.
7.6 Investigation of Blue Jay. The Seller shall have
completed its review of such books, records, accounts, contracts and documents
of or relating to the financial condition, liabilities, results of operations,
business and prospects of Blue Jay and such other inquiries or investigations
as it deems necessary or advisable and the results of such review shall be
satisfactory to the Seller in its sole discretion. Without
8
<PAGE> 9
limiting the generality of the foregoing, the Seller shall be satisfied that
(a) Blue Jay has no liabilities or obligations, whether absolute, accrued,
contingent or otherwise and whether due or to become due, that are not fully
reflected on the balance sheet of Blue Jay as of March 31, 1996, (b) there are
no claims, suits, actions, arbitrations, administrative proceedings or
investigations pending or threatened against Blue Jay that could have a
material adverse effect on Blue Jay, (c) that the Blue Jay common Stock to be
issued pursuant to that Agreement and the UDI Agreement when issued will be
validly issued, fully paid and non assessable and (d) there is no reasonable
basis for the assertion against Blue Jay of any such liability or obligation or
for the assertion or commencement of any such claim, suit, action, arbitration,
administrative proceeding or investigation.
ARTICLE VIII
CONDITIONS TO BLUE JAY'S OBLIGATION TO CLOSE
The obligation of Blue Jay to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction and fulfillment, prior
to or on the Final Closing Date of each of the following conditions:
8.1 Representations and Warranties. The representations
and warranties in this Agreement made by the Shareholders shall be true and
correct in all respects as of and at the Final Closing Date.
8.2 Performance of Covenants and Obligations. The Seller
shall have performed and complied with all of its material covenants and
obligations under this Agreement.
8.3 Closing of the UDI Agreement. The transactions
contemplated by the UDI Agreement shall have been consummated prior to or on
the Final Closing Date.
ARTICLE IX
OTHER AGREEMENTS
9.1 Cooperation: Public Announcements. Seller and
Blue Jay shall cooperate fully with each other and their respective counsel and
accountants in connection with any actions that may be required to be taken in
order to satisfy their respective obligations under this Agreement. Seller and
Blue Jay shall cooperate with each other in the preparation of any press
releases in connection with the transactions contemplated by this Agreement and
in the preparation and filing of any documents with the Securities and Exchange
Commission or any state securities
9
<PAGE> 10
agency required as a result of such transactions. Except upon the advice of
counsel or as may be required by law (and in either case upon notice to the
other party), neither Seller nor Blue Jay will, without prior consultation with
the other, make any press release or announcement to the public concerning the
transactions contemplated by this Agreement.
9.2 Confidentiality. Each party to this Agreement
understands that certain information which it has been furnished and will be
furnished in connection with this Agreement is confidential and proprietary,
and agrees that it will maintain the confidentiality of such information and
will not disclose it to others or use it, except in connection with the
transaction contemplated hereby, without the consent of the party furnishing
such information. Information which is generally known in the industry
concerning a party or among such party's creditors, generally, or which has
been disclosed to the other party by third parties which have right to do so,
shall not be deemed confidential or proprietary information for these purposes.
In the event that a party is at any time requested or required (by oral
questions, interrogatories, requests for information or documents, subpoena or
similar process) to disclose any information supplied to such party in
connection with such transaction, such party agrees to provide the party
furnishing such information with prompt notice of such request(s) so that the
party furnishing such information may seek an appropriate protective order
and/or waive compliance of the party receiving such information with the terms
of this Section 9.2. Notwithstanding the terms of this Section 9.2, if, in the
absence of a protective order or the receipt of a waiver hereunder, the party
receiving such information is nonetheless, in the opinion of its counsel,
required to disclose information obtained in connection with such transaction
or else stand liable for contempt or suffer other censure or penalty, the party
receiving such information may disclose such information, to the extent and in
the manner so required, without liability hereunder. In the event that such
transaction is not consummated, each party agrees to promptly return all
confidential materials (and all copies thereof) which have been furnished to
him regarding the business and financial condition of the other party,
including all financial statements, reports, contracts, customer lists,
accounts, records, tax returns, data, plans, processes and trade secrets except
to the extent any such documents shall otherwise be publicly available.
10
<PAGE> 11
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated in
the following circumstances:
(a) By mutual consent of Seller and Blue Jay;
(b) By Seller in the event the conditions in
Article VII of this Agreement are not satisfied or waived on or before July 31,
1996;
(c) By Blue Jay in the event the conditions in
Article VIII of this Agreement are not satisfied or waived on or before July
31, 1996.
10.2 Effect of Termination. In the event this Agreement
is terminated pursuant to this Article X, this Agreement shall be void and have
no further force and effect.
ARTICLE X
MISCELLANEOUS
10.1 Notices, Etc. All notices, requests, demands, and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered by hand, telegram, telex
or telecopy (receipt confirmed) or seventy-two hours after being mailed, first
call, certified mail, postage prepaid:
(a) To Blue Jay:
Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
Attention: Robert M. Bernstein
With copies to:
Joseph M. Berl
Baker & Hostetler
1050 Connecticut Ave., N.W.
Washington, DC 20036-5304
(202) 861-1500; Fax: (202)861-1783
11
<PAGE> 12
Timothy Smoot, Esq.
7002 Moody Street
Suite 112
LaPalma, CA 90623
(310)402-1801, Fax: (310)402-0643
(b) To Bernstein:
Robert M. Bernstein
c/o Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
(c) To Seller:
Capital Idea, Inc.
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
(610)363-8237; Fax: (610)524-8715
Attention C. Eugene Hutcheson
With copies to:
Peggy E. Brever, Esq.
Michael Best & Friedrich
100 East Wisconsin Avenue
Milwaukee, WI 53202
(414)271-6560: Fax: (414)277-0656
Barrett & Schuler
1000 Thomas Jefferson Street
Suite 305
Washington, DC 20007
Attention; David M. Barrett
(202) 728-0888; Fax: (202) 296-7490
10.2 Entire Agreement. This Agreement supersedes
any other discussions and agreement between the parties hereto with respect to
he matters contained herein, and this Agreement and the agreements to be
executed and delivered pursuant hereto and thereto contain the sole and entire
agreement between the parties hereto with respect to the transactions
contemplated herein and therein.
10.3 Amendments and Waivers. This Agreement may be
amended only by an instrument in writing executed by the party against whom
enforcement of the amendment is sought. The president or any vice president of
any corporate party may by a signed writing give any consent, take any action,
waive any inaccuracies in representations or other compliance by any other
12
<PAGE> 13
party to any of the covenants or conditions herein, modify the terms of this
Agreement to take any other action deemed by him to be necessary or appropriate
to consummate the transactions contemplated by this Agreement.
10.4 Counterparts; Headings. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. The
headings herein set out are for convenience of reference only and shall not be
deemed a part of this Agreement.
10.5 Binding Effect; Assignment. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, successors and assigns. The Shareholders shall have
the right to assign all or any portion of their rights under this Agreement to
any of their affiliates at any time without the consent of Blue Jay or
Bernstein; provided, however, that notwithstanding such assignment, the
assigning Shareholder(s) shall remain obligated to Blue Jay pursuant to the
terms and conditions of this Agreement.
10.6 Governing Law. The validity and effect of this
Agreement shall be governed by and construed and enforced in accordance with
the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BLUE JAY ENTERPRISES, INC.
By: /s/ ROBERT M. BERNSTEIN
---------------------------
Robert M. Bernstein
President
By: /s/ HARVEY KRAVETZ
---------------------------
Harvey Kravetz
Secretary
CAPITAL IDEA, INC.
By: /s/ C. EUGENE HUTCHESON
---------------------------
C. Eugene Hutcheson
President
/s/ ROBERT M. BERNSTEIN
------------------------------
Robert M. Bernstein
13
<PAGE> 14
INDEX OF EXHIBITS AND SCHEDULES
Exhibit A None
Exhibit B Escrow Agreement
Exhibit C Pledge Agreement
Exhibit D Consulting Agreement
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH BALANCE SHEET AND STATEMENT OF OPERATIONS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 50
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 50
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 50
<CURRENT-LIABILITIES> 32,932
<BONDS> 0
0
0
<COMMON> 724,059
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 50
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,608
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,608)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
